This study evaluates the relative effectiveness of two approaches to the problem of recidivism among the chronically mentally ill. The approaches are distinguished by the respective responsibilities assigned to mental health workers and patients. In the Assertive Case Management (ACM) model, the worker assumes an active role in maintaining the patient in the community, while in the Drop-In Center (DIC) model, this responsibility rests with the patients and a peer network. The study is conceptualized as a comparison between an experimental group, for which there is already considerable evidence of its efficacy, and an active placebo comparison group, which clinical experience suggests is beneficial but presumed to be less potent than the active intervention. Both programs are already in place and serve similar clientele within a major urban area. One hundred male schizophrenics, stratified according to their days of psychiatric hospitalization during the preceding year will be randomly assigned and followed for one year. Patients will also receive services from traditional aftercare programs within the existing community mental health system. The two treatment groups will be compared on hospital utilization during the treatment year and with respect to the baseline pretreatment year. A benefit-cost analysis will determine if the more labor-intensive ACM approach achieves greater overall savings than the inexpensive DIC approach when hospitalization costs are factored in. We will also examine patterns of residential living, appropriate use of social programs, and indicators of psycho-social adjustment, and document aspects of each approach which appear to be most effective in promoting community adjustment, and will identify patient characteristics contributing to successful and unsuccessful use of these programs.